On the day his grandson was born, a man deposited to a trust company so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw the lump sum on his 25th birthday. The grandson chose this option. Draw a cash-flow diagram Question: (a) How much did the boy receive as a single payment? (b) How much did the grandfather deposit? 2. A car is to be paid P15,000 at 9% interest rate. What is the equivalent amount of car after 9 years at an annual interest rate of 6% compounded quart

On the day his grandson was born, a man deposited to a trust company so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw the lump sum on his 25th birthday. The grandson chose this option. Draw a cash-flow diagram Question: (a) How much did the boy receive as a single payment? (b) How much did the grandfather deposit? 2. A car is to be paid P15,000 at 9% interest rate. What is the equivalent amount of car after 9 years at an annual interest rate of 6% compounded quart

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 4MC: Refer to the present value table information on the previous page. What amount should Brett have in...

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On his 21st birthday, Gab was gifted P500,000. He invested this money in a mutual fund that earns 10% compounded semiannually. Gab also made annual deposits amoounting P30,000 in the same account. After 10 year, he decided to withdraw P250,000. Gab plans to retire at age 55 using the money in the account with monthly withdrawal thereafter. a. draw a cash flow diagram b. what is the balance of the account after Gab withraws P250,000
(Please give the detailed solution,thank you) On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of P10,000 each for his college tuition fees, starting on his 18th birthday. Interest rate of 13.6% per annum was to be paid on all amounts on deposit. There was also a provision that the grandson could elect to withdraw no annual payments and receive a single lump sum amount on his 25th birthday. The grandson chose this option. 1. How much did the boy receive as the single payment? 2. How much did the grandfather deposit?
To illustrate the preceding discussion, suppose that a father, on the day his son is born, wishes to determine what lump amount would have to be paid into an account bearing interest of 12% per year to provide withdrawals of $2,000 on each of the son’s 18th, 19th, 20th, and 21st birthdays.
On the day his son was born, a father deposited to a trust company a sufficient amount of money so that his son could receive money in the future. There was a provision that the son can withdraw an amount of P10,000 each year for 3 years starting on his 18th birthday and P15,000 eight months after the last withdrawal. The interest rate is 5% compounded monthly. 1. What is the effective interest rate? 2. How much did the father deposit? 3. How much money can he receive on his 18th birthday, if he decided to withdraw all the money at once?
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On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so that the boy could receive five annual payments of P 10,000 each for his college tuition fees, starting with his 18th birthday. Interest at the rate of 12% per annum was to be paid on all amounts on deposit. There was also provisions that the grandson could select to withdraw no annual payments and received a single lump on his 25th birthday. The grandson choose this option. How much did the grandfather deposit?
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Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
A couple is planning to finance their 5-year-old daughter's college education. They established a college fund that earns 15%, compounded annually. What annual deposit must be made from the daughter's 5th birthday (now) to her 16th birthday to meet the future college expenses shown in the following table? Assume that today is her 5th birthday. Draw cash flow diagram. birthday deposit withdraw 5-16 A 18 $25 000 19 $27 000 20 $29 000 21 $31 000
John Rider wants to accumulate $40,000 to be used for his daughter’s college education. He would like to have the amount available on December 31, 2026. Assume that the funds will accumulate in a certificate of deposit paying 8% interest compounded annually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Answer each of the following independent questions. Required: If John were to deposit a single amount, how much would he have to invest on December 31, 2021? If John were to make five equal deposits on each December 31, beginning a year later, on December 31, 2022, what is the required amount of each deposit? If John were to make five equal deposits on each December 31, beginning now, on December 31, 2021, what is the required amount of each deposit?